Motor Sich Approves USD 1 mln Dividend Payout.

At their AGM today, Motor Sich (MSICH: BUY) shareholders approved a USD 1 mln dividend payout (2% of 2007 net income), implying DPS of USD 0.48 and yield of 0.18%. CEO Vyacheslav Boguslayev announced financial targets for 2008: increasing sales by 14% yoy to USD 406.5 mln and raising net income by 17% yoy to USD 48.0 mln. Inna Perepelytsya: Motor Sich has already concluded contracts to account for the 14% increase in sales in 2008. Given the management’s history of announcing conservative targets at past AGMs, we believe revenues will turn out to be higher than Boguslayev indicated. The announced sales target is 7% higher than our forecast (USD 379 mln), while net income is in line with our projection (USD 49.2 mln). The news coming out of the AGM confirms Motor Sich’s fundamentally strong investment case. After being pulled down by recent volatility on the PFTS (drop of 7% since February 29), Motor Sich’s current stock price offers 36% upside to our target of USD 375.